BENGALURU: Snapdeal CEOKunal Bahl faces a possible make or break moment. The online marketplace’s daily shipments have halved in recent weeks to 60,000-80,000 units a day, and gross sales have dropped to a fraction of the company’s peak of $3.5-4 billion in 2015, according to three people familiar with developments. It is also finding it difficult to raise more cash and several senior executives have quit.

Snapdeal will need to make a considerable leap to become “India’s first profitable ecommerce company in two years” — a goal Bahl sought to highlight in an email to employees on Wednesday while also announcing an unspecified number of layoffs. Founders Bahl and Rohit Bansal have pledged to forego their salaries and some top executives have offered to take pay cuts.

The founders also admitted to their mistakes. “We started growing our business much before the right economic model and market fit was figured out... a large amount of capital with ambition can be a potent mix that drives a company to defocus from its core. We feel that happened to us. We started doing too many things, and all of us starting with myself and Rohit, are to blame for it,” Bahl wrote.

Bahl’s aggressive emphasis on profits comes amid a lengthy quest for capital by Jasper Infotech Pvt Ltd, Snapdeal’s parent company. How quickly the company can raise financing will determine its ability to sustain operations.

It had about $250 million in the bank in November, according to a fourth person aware of the matter. Snapdeal’s cash burn rate, including FreeCharge, was estimated at a little over $20 million a month towards the end of last year.

The profitability chase also runs the risk of Snapdeal losing its position as the third-largest online marketplace in the country to players like ShopClues and Alibaba-backed Paytm Ecommerce, which would make it harder for it to raise capital in the short term from new investors.

Snapdeal is currently number three, behind Flipkart and Amazon India. The latter dislodged it from the second spot last year. “While we do not comment on specific business figures, we can confirm that we are driving steady growth on our path to profitability,” a spokesperson for Snapdeal said in an emailed statement on shipment numbers.

Bahl, in his letter to employees, stated that profitability push will lead to a “conscious departure from a me-too race to the edge of the cliff”.

Snapdeal had in 2015 indicated a three-year runway to operational profitability. In 2015-16, the company’s total sales increased 56% to Rs 1,457 crore but losses more than doubled to Rs 2,960 crore.

Snapdeal has had to contend also with sellers exiting the platform because of decreasing shipments.

More than 300 members of the All India Online Vendors Association have stopped selling on Snapdeal because of increasing losses and payment risks, said a spokesperson for the industry body that represents about 1,800 merchants.

“There was a little boost during the Diwali sale due to the advertisement blitzkrieg by Snapdeal, but after that shipments dropped once again. Sellers are now concentrating mainly on Flipkart and Amazon,” he said.

To cut its biggest fixed cost — salaries — Jasper began a fresh round of job cuts this year, a move that could affect about 1,000 employees, ET reported this month. Also, a slew of top executives have left recently, the latest being Govind Rajan, who was CEO of the payments unit FreeCharge.

Snapdeal has been negotiating with its largest shareholder, Japanese Internet and telecom conglomerate SoftBank, for financing it at a valuation lower than the $6.5 billion it commanded during its last fund-raising in February 2016.

CAPITAL FOR FREECHARGE, STRATEGIC PARTNER FOR VULCANAn 18-month-long process to raise external capital for FreeCharge, including a strategic stake sale, has so far not yielded results. Jasper is seeking to rope in a strategic partner for logistics unit Vulcan as well.

“We have seen strong incoming interest from entities desiring to invest and participate in the growth journey of FreeCharge. Vulcan is now on the cusp of profitability and will soon expand its scope of operations to also service non-Snapdeal clients,” the Snapdeal spokesperson said on the proposed stake sales.

Bahl, one of the shrewdest neweconomy entrepreneurs, has taken Jasper through multiple changes in business models. The company faced a similar crunch situation in 2013 when it ran out of cash one week before salaries were due but Bahl was able to raise funds at the last moment.

“He is a survivor,” said a person who has closely worked with Bahl. “Kunal has made up his mind that the way to go ahead is make this a profitable company, and the analogy is Infibeam. It’s better to be one-fifth of Amazon and be profitable.”

Gujarat-based Infibeam, which debuted on the stock market in April 2016, has seen its market capitalisation triple to Rs 7,682 crore, underlining how public market investors tend to reward profitability more than top line growth.

One expert said that given the recent developments Bahl has little choice but to chase profits. “His challenge has simply been the inability to create stickiness and loyalty. Partly, that’s a function of the market not being mature enough. This leads to fixation on prices and makes it hard to create stickiness,” said Kartik Hosanagar, professor of technology and digital business at The Wharton School.

“Given the difficulties of raising money, Snapdeal has no option but to pursue profitability,” he said. “Snapdeal has to establish a strong presence in some high-margin niche, like Flipkart has Myntra.”